Treasury deaf to reform ideas

The banking industry says its concerns about slated consumer credit reforms have fallen on deaf ears at Treasury and warned this would result in less product flexibility, industry transparency and a failure to help the 1 per cent of credit card customers with debt problems.

The assertions from the chief executive of the Australian Bankers Association,
Steven Münchenberg,
were made at a public hearing into the National Consumer Credit Protection Amendment for home loans and credit cards.

Separately, yesterday a senior banker also expressed frustration that submissions from the industry on the bill, which banks had rushed to file by deadline last Friday, were still not available for the public hearing yesterday.

Normally submissions are published before public hearings so those giving evidence can read other stakeholders’ views.

The credit card bill will introduce new rules on how banks market credit cards including a ban on offering increases to credit limits.

At yesterday’s hearing Mr Münchenberg said, “We have had a lot of discussions with Treasury but it has not resulted in amendments to address concerns and in some cases we went backwards."

A draft of the ABA’s submission to the inquiry noted, “The bill contains a number of provisions which are contrary to positions which the ABA understood were established at these consultations. As a result, the bill presents substantial business risks and operational challenges for banks and other credit providers."

It said this could result in confused outcomes for consumers and increase the risk of complaints.

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Mr Münchenberg pointed to several adverse consequences that would arise from the credit card and home loans bill.

These included making low or zero balance transfers commercially unviable by mandating that higher interest debt be repaid first, and not being able to advise people individually of their option to access extra credit in emergencies.

The ABA chief said the need to provide a home loan fact sheet would be of less use to consumers than existing financial comparison websites and place added strain and cost on lenders’ systems.

The fight over the government’s new rules for marketing credit cards comes at the same time as a stoush over laws banning price signalling.

The same parliamentary committee conducting the inquiry into the credit cards bill is also conducting an inquiry into both the government’s bill to ban price signalling and a similar bill proposed by the Coalition.

Bankers are disappointed the committee has refused to provide a public hearing on the government’s price-signalling bill while the industry has been given less than a week to make submissions.

Both the ABA and Law Council of Australia have expressed concern about the lack of consultation on the price-signalling bill, with the chairman of the Law Council’s trade practices committee, Stephen Ridgeway, last week describing the time for feedback as “manifestly inadequate".